Question

You are auditing Seaside Hospital and Medical Complex. You complete a walkthrough with the help of Seaside’s controller. The following comments relative to cash receipts are outlined in your memo describing Seaside’s accounting procedures.
1. Cash receipts are sent directly to the accounts receivable clerk, with no processing by the mail department. The accounts receivable clerk keeps a cash receipts journal, prepares the bank deposit slip in duplicate, posts from the deposit slip to the subsidiary accounts receivable ledger and mails the deposit to the bank within 2 days.
2. The controller validates the deposit slips directly (unopened) from the bank, also receives the monthly bank statements directly, and promptly reconciles the account.
3. At the end of the month the accounts receivable clerk notifies the general ledger clerk of the monthly totals of cash receipts for posting.
4. Each month, the general ledger clerk makes debit entries to record Cash from sources other than cash receipts from patients (i.e., borrowed funds).

Required:
List at least three problems indicated. For each, identify one audit procedure to investigate the problem, the reason for the audit procedure, and a recommendation that Seaside should implement. Use the following table to organize youranswers


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  • CreatedJanuary 21, 2015
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